A trucker shared photos on Facebook last week of Carroll Fuel tents advertising $4.43 and $4.25 per gallon diesel near the Port of Baltimore. Two other drivers responded that they had seen stations charging $4.39.
“They dropped the tax,” commented a fourth.
Maryland became the first state in the U.S. to enact a gas tax abatement for 30 days this month. On the same day, Georgia enacted a longer term of almost three months. Republicans in California failed to force a vote on suspending the gas tax there, but other states continue to weigh similar measures amid consumer frustration over inflated gas prices and inflation overall.
Some petrol stations have reduced prices, which are subject to a number of other factors, but governments cannot require them to do so. Even falling prices could fail to reduce fuel costs for interstate truckers because the International Fuel Tax Agreement, a tax paid to states for the use of their roads, remains in place.
“I don’t think they’re going to do anything for the trucking industry,” said Lewie Pugh, executive vice president of the Independent Owner-Operator Drivers Association, referring to the tax relief measures.
“No matter where they bought fuel,” Pugh said, “they still have to pay the tax in every state for the miles they run.”
“We call on states to review these systems”
American Trucking Associations have lobbied against cutting fuel taxes at the federal level, citing concerns about jeopardizing funding for critical maintenance projects. The group also opposes state-level efforts.
“These suspensions will do little to nothing to ease the burden on consumers — including trucking companies — while jeopardizing states’ ability to collect the necessary revenue for major infrastructure investments,” said Darrin Roth, ATA vice president on highway policy, in an email.
Excise taxes are collected by gas stations at the wholesale level, not directly from drivers at the pump, Roth pointed out.
“It is questionable that the savings from these tax breaks will even be passed on to the consumer,” he wrote. “We urge states to review these systems and not play politics with these significant user fees.”
The Georgia Department of Revenue is considering a regulation that would exempt truckers from the IFTA by treating Georgia miles as tax-free during the tax holiday, Ed Crowell, president and CEO of the Georgia Motor Trucking Association, said in an interview.
“Once they go into effect, which I expect in the next week or so, that’s when you’ll see some impact to the benefit of the trucking industry as a whole,” Crowell said Tuesday.
It’s the second time the state has suspended gas tax collection in the past year, with another following the shutdown of the Colonial Pipeline last May, the Atlanta Journal-Constitution mentionted. Crowell doesn’t expect an extension of the current tax holiday, “unless something dramatically bad happens,” he said.
“It’s not a silver bullet that fixes anything long-term,” he said. “It’s some relief, some help, for a little while.”
Louis Campion, president and CEO of the Maryland Motor Truck Association, said the industry generally appreciates any reduction in fuel costs “that can help us mitigate the dramatic increases we’ve experienced.”
“However, while recognizing that fuel taxes support transportation infrastructure, the state must ensure that the transportation trust fund is still full so we don’t see a shortfall or a reduction in projects funded in Maryland,” Campion said.
State legislators said the Baltimore Sun they will use a $7 million surplus to supplement the gas tax holiday’s $98 million hit to the Maryland Transportation Fund, which pays for highways, transit and other projects.
“I’m trying to figure out how we can make money”
High fuel costs significantly affect truckers’ thinking about not only where to stop for gas, but whether to even accept a load in the first place, said Corey Pointer Sr., owner-operator of T&C Trucking.
Route 68 through mountainous western Maryland, for example, is a “roller coaster” with slopes that reduce the gas mileage of trucks in what drivers call “leaving fuel on the ground,” Pointer said.
“You burn a lot of fuel going up and down that mountain,” said the 43-year-old trucker from Baltimore.
Lower fuel prices in Maryland and Georgia will likely prompt drivers to pump more gas in those states, Poyder said, and he predicted other states will follow suit with gas tax cuts.
“This makes drivers laser-focused on filling up in Maryland only,” he said, “not going too far where they might need to fill up anywhere in another state.”
But he also worried whether the IFTA tax for other states would negate the fuel cost savings. He said he owed Pennsylvania $500 at the end of the quarter when his trucks went into the state, but he didn’t buy gas there.
“I’m trying to figure out how we can make money at this point,” he said. “You spend the money from the fares quite often. And then if you have a driver, you have to pay the driver and the money doesn’t really add up.”
A “myopic” political “trick”?
Politicians in Maryland and Georgia have introduced similar fuel tax holiday laws.
Georgia Republican Governor Brian Kemp wrote on Twitter: “We can’t fix everything that’s broken in Washington, but we’re doing what we can to lessen the impact on your wallet.”
On Friday, I signed HB304 to temporarily suspend the state fuel tax and give hard-working Georgians some relief at the pump. While we can’t fix everything that’s broken in Washington, we’re doing what we can to lessen the impact on your wallet.https://t.co/9Mr56CP6Dg
— Brian Kemp (@BrianKempGA) March 22, 2022
Maryland Comptroller Peter Franschot, a Democratic gubernatorial candidate whose agency regulates gas stations, had requested a tax cut for 90 days. He called the 30-day measure “Peter Franchot’s Gas Tax Holiday” on a campaign post on Instagram.
Michael Sakata, president and CEO of the Maryland Transportation Builders & Materials Association, was alone in testifying in opposition.
Sakata called the effort “short-sighted” during a March 15 joint hearing of the state Senate and House committees in Annapolis.
“It fails to consider alternative relief proposals that would have a greater impact on more Marylanders – namely, reducing the state sales tax over a similar period of time,” he testified. “Lower-income residents of our urban areas who depend on mass transit to get around — and who need the most relief — will gain nothing from the bill as proposed.”
In an interview, Sakata pointed out that the average driver’s savings are expected to be minimal: about $4 from a 12-gallon tank of gas. He advised other states considering such actions not to threaten transportation project funding streams for what he called a “gimmick” gas tax break.
“Yeah, people feel it at the pump, but they feel it everywhere, right?” he said. “They feel it in the gallon of milk. They feel it in the diapers they buy. They feel it in everything.”